This Is Why Your Car Insurance Is About to Get More Expensive

Car insurance rates could skyrocket by 22 percent by the end of the year, according to a new Insurify midyear report.

Car insurance prices have already spiked by 15 percent in the first half of 2024, but it doesn't look like that's anywhere near the end of the price pains drivers are in store for.

The prediction means the average car insurance rate would hover at $2,469, and states that experience severe weather could soar as high as 61 percent for car insurance rates.

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Currently, the average annual cost of full coverage is $2,329, a 15 percent surge from $2,018 at the end of 2023.

The states that will see some of the most intense rate changes are Minnesota, California and Missouri, which all see upticks of more than 50 percent by the end of 2024.

Maryland was the most expensive state for car insurance. With rates surging at 41 percent, Insurify predicted that the state average would rise to $3,400.

Several car insurance industry experts have predicted lower rate increases in 2024, but Insurify found that the data isn't consistent with these estimates so far.

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Instead, skyrocketing car repair costs and new car price tags, alongside a surge in weather-related claims, have insurers continuing to hike their rates.

Repair and maintenance costs increased by 38 percent over the past five years, according to the Bureau of Labor Statistics consumer price index, and hail-related auto claims accounted for 11.8 percent of all claims in 2023, up from 9 percent in 2020.

Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, said the increasing amount of technology in vehicles is a key factor for the perpetual price increases.

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"Especially for foreign cars, I recently discovered a BMW X3 side view mirror cost over $1k for replacement," Thompson told Newsweek. "The replacement cost for the inputs in these vehicles is continuing to climb, as more chips and tech is being placed inside of vehicles."

Recent data from the National Highway Traffic Safety Administration found traffic deaths increased by 7,000 in 2022, which also saw the number of claims and eventual insurance rates rise.

"It's the perfect storm of items for insurance companies to say, 'We need to increase prices to offset all of these potential new risks,'" Alex Beene, a financial literacy instructor at the University of Tennessee at Martin, told Newsweek.

Driving without car insurance, despite the initial cost savings, can lead to many financial obstacles down the line if you do end up in a crash and also potentially expose you to a lawsuit.

"At the same point, despite higher prices, auto insurance is not something drivers want to be without," Beene said. "While it may not be funny to pay that insurance bill, the reality is the cost of an accident and subsequent repairs is far higher. "